Some still living with their parents, others with multiple roommates and definitely renting, so many well-educated young people can’t move forward with their American Dream of marriage, starting a family and owning a home.
The culprit is student loan debt.
Nationally, student loan debt has topped $1.2 trillion. 10 million federal students loans are taken out annually, and that doesn’t account for the high-interest private loans many take out as well. Of these borrowers 6.7 million are delinquent. There is no relief in filing bankruptcy either. Student loans cannot be offloaded that way. Lenders can garnish wages and even Social Security benefits to get repaid. The average loan balance for that age group is now more than $25,500, up from $15,900 in 2005.
The challenges of a significant demo of the population being saddled with this kind of debt is exacerbated by the fact that jobs just don’t pay what they used to and many new graduates’ loans repayment kick in before they have even found a job. Many are forced to defer payment, but that can only last but so long.
For African Americans with student debt the outlook is even more dire. African American unemployment is twice that of white unemployment and on average African Americans remain jobless for twice as long. For those saddled with student loan debt, this means they are unable to make payments, resulting in poor credit ratings.
For the longest, older generations have looked at the problem of student debt as one that doesn’t concern them. Well, no longer.
Cash strapped millennials living check to check are unable to buy homes, which means the housing market as taken a hit. Home builder adviser John Burns Consulting published details from a study in October concluding that student loan payments will cost the housing industry 414,000 transactions this year that would have totaled $83 billion in sales.
If you consider the broader implications, that’s 400,000 homes that will no longer need to be furnished, there goes millions of dollars in sales that will no longer enter our economy.
It doesn’t stop there, millennials are living on smaller budgets, so they are not eating out, buying luxury items or going on vacations. Their inability to spend discretionary funds affects everyone.
Many are quite vocal that they wish they’d never set foot on a college campus. These attitudes are dangerous because that is a slippery slope to having an undereducated people that can’t compete globally.
Student loan debt might possibly be one of the greatest issues of our generation, despite the lack of attention being paid to actually fixing it and in a sustainable manner.